1)Highway 307 Inc. has been in business for five years and incurs a loss of $320,000 in 20x15. The company has no temporary differences. The history of the company's earnings since they began operations is as follows:

The tax rate has been constant at 40%.

Required:

Prepare journal entries to record the recovery of taxes and any journal entries necessary for any loss carry forwards. Assume probability of recovery is greater than 50%